Apple doesn't split their sales numbers, they will do this for a reason, because the majority of the sales will be for the cheaper models.
As for cancelling the Classic, what would they replace it with? The 64GB touch is NZ$663, the Classic is nz$439, so I have to spend 50% more to get under half the storage?

You mean like the original iPhone wasn't a smartphone because it couldn't do some basic functions that other smart phones had done for years? Like video, MMS, apps and multitasking.
You are welcome to live in your dream world, but that phone will browse the web, will let you install native apps, has native mail support etc etc etc, it has as much right be called a smartphone as other things being sold.

If we go over the 45GB it is down to 64/32k, or NZ$30 to get another one time increase of 45GB. But we do use that connection for more things then just wanting on Apple to release something. We also have another 4GB to download X-Code, plus all the Steam games waiting to download...